Thursday, November 17, 2022

Market Deployment #4 : The future of Ang Moh is being more Kiasu


Being a parent in Singapore is like being tossed between the philosophies of two different civilizations. I just met my son's kindergarten teachers and can see this clash of ideologies in full swing. My son's English teacher is very cheerful, and encouraging and seems to want to make learning more fun, emphasising creative thinking and life skills. His Chinese teacher, an immigrant from PRC, reminded me that if a child can eat three times a day, doing three pages of exercise should be easy peasy and laments the reduction of Chinese Spelling in primary schools next year. 

Over time I can imagine this effect on kids. They will evolve like me, and even though they willingly invest heavy amounts of time in CL2 and work hard to get great results, they will likely align themselves with the Anglophonic world as it allows them to express their individualism more. 

This game is played throughout the world stage.

Investors should try to read books that attempt to predict the future. One periodical that does so is a special issue of The Economist that will talk about the world in 2023. For the extremely long helicopter view, Hamish Mcrae talks about The World in 2050. These predictions, while not fully accurate, are based on long-term trends.

I don't want to spill all the beans on this excellent book, but I just want to talk about one point I find extremely interesting. 

It is the idea that the future of Ang Moh is more Kiasu.

The book's main premise is that the US will retain its dominance even after losing the no.1 spot in economic size to China sometime after 2030. The main reason is that the US remains a very fertile country that supplements its population growth with many enterprising immigrants from other parts of the world. China, on the other hand, will become an ageing population like Japan and will lose its economic vigour as we head towards 2050. 

One possible side-effect of these long-term trends is that, over time, Asians in America will dominate higher education, politics and even pop culture because Asians just work harder and have a strong preference for STEM subjects. As the US Supreme court was to take out some forms of affirmative action that privileges blacks and Hispanics at the expense of Asian Americans, the work ethic and rigour of Asians would influence the West, so we may see Westerners become less individualistic and adopt more kiasu practices towards their studies. 

Let's face it, if I were a white guy, would I let Asians just walk over me in maths class and tech startups? I don't think so; I can adopt some of the work ethic of my Asian classmates. Similarly, as an Asian in the US, I would also like to be seen as cool. 

Cool might mean being more like Simu Liu than CZ, for example.

There are long-term implications for this. 

Singaporeans who cannot make it in the local system may think they can fly off to a place like Australia or UK where they can academically walk over Caucasians and get GPAs they will never attain in NUS had better be ready for a big fight when they get there. This is because second-generation Singaporeans might already be trying to spoil the market for everyone. 

As for my work deploying my funds in the markets, I've already started to regret moving some DBS to high-yielding REITs as DBS has increased even further. But mistakes are part and parcel of investing life; I've made money even as I thought a red tsunami would sweep Democrats out of the Senate. 

I expect to deploy some funds into the portfolio built by my students this week, but I do not expect any big moves for now. Expect REIT DPUs to be on a downtrend for the next 3 quarters, but prices have already adjusted to account for this fact. 


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